Michael Moore: May I first say that I was very pleased to invite the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), to the employment gathering in Edinburgh, which was very well attended by representatives of the different stakeholders and a representative of the Scottish Government? As we made clear at the time, it is our intention to ensure that the voluntary sector is as involved as possible. The two preferred bidders, Ingeus and Working Links, have made it clear that they are going to discuss the role of the voluntary sector in their supply chains. That discussion is ongoing and not yet resolved. Beyond that, there are other streams of work coming out of the Department for Work and Pensions for which the voluntary sector and others will be able to bid.

David Mundell: The Secretary of State for Scotland and I are in regular contact with the Secretary of State for Work and Pensions on a range of issues concerning implementation of the universal credit in Scotland.

Guto Bebb: In Scotland, the public sector accounts for about 50% of gross domestic product. If we are to succeed in making the country less dependent on the public sector, we need to ensure that the private sector has access to the personnel that it needs to grow. Does the Minister agree that the universal credit will help to make work pay, and that it will contribute to the rebalancing of the economy of Scotland and the UK?

David Mundell: The hon. Gentleman has followed the progress of the Scotland Bill in detail, but he will know that in relation to the core aspects of universal credit and benefits, the Government have given an undertaking that no one will be worse off in cash terms when the universal credit is introduced.

David Mundell: The hon. Gentleman would have some credibility in asking that question had he not repeatedly raised in the Chamber the costs of petrol and fuel oil in his constituency. It is clear that the Chancellor and the Chief Secretary got the balance right in the Budget between the taxation of the oil industry and the taxation of the motorist. If the hon. Gentleman wants to tell his constituents that they should be paying 6p a litre more on their fuel, he is welcome to do so.

Michael Moore: First, may I again recognise the hon. Gentleman’s consistent efforts on behalf of the computer games industry? I recognise the importance of the industry not just to Dundee and Scotland, but to the UK as a
	whole. As he knows—and as I hope the response to the Select Committee’s report reinforces—we have considered very carefully the incentives we need to offer not just to the computer games industry, but to a whole range of sectors in Scotland and across the country. It is our judgment that to get ourselves away from the danger zone we were in last May, it is important to tackle the deficit and to get ourselves on the path to growth. We have done that in successive Budgets setting out plans to reduce corporation tax, to keep interest levels low, to reduce the national insurance burden and to set out important new targets for banks and their lending to small businesses. That applies to the computer industry sector as much as to any others. Once again I will be happy to meet with him to discuss the matter, if he would like.

Scottish Independence (Banking Failure)

David Mundell: Banks and other financial institutions are vital to the functioning of the economy. Although no specific work has been commissioned on the banking bail-out in Scotland, a 2010 National Audit Office report states that the total amount at stake is currently £512 billion. As of December 2010, £124 billion in cash had been invested in Government financial interventions. Based on NAO data, the Scottish Parliament Information Centre, SPICe, has estimated that the Royal Bank of Scotland and the Lloyds Bank Group were provided with £470 billion. SPICe also calculated that this figure was three times the annual Scottish GDP, and that the total UK Government intervention of £751 billion was equivalent to just over half of UK GDP.

Greg Hands: Thank you, Mr Speaker. Will the Minister join me in welcoming the report by the Independent Commission on Banking, under Sir John Vickers, and can he remind the House who, in the last Parliament, awarded Sir Fred Goodwin a knighthood for services to banking?

Edward Miliband: He is the guy who came along and said that cuts not of 12% but of 20% were necessary for efficiency savings in the police budget. It is his choice; why does he not defend it? Perhaps one reason people are so angry is that a year ago the Prime Minister said on the eve of the election:
	“Any cabinet minister who comes to me… and says ‘Here are my plans’ and they involve frontline reductions, they’ll be sent”
	packing. What does he say to the Home Secretary about cases such as that of Martin Heard—or has he just broken another promise?

Edward Miliband: Once again, the Prime Minister has not answered the question. We know from the Office for Fair Access that it is not going to cut the fees of the universities. The assistant director said at the weekend:
	“We are not a free pricing regulator: that is not our role... we wouldn’t say to an institution we would only allow a fee of ‘X’ or ‘Y’.”
	Will not the Prime Minister admit that on top of a broken promise not to raise tuition fees and a broken promise that £9,000 would be the exception, he is now breaking another promise on the capping of excessive fees?

Jack Straw: Does the Prime Minister share my profound anxiety about the recommendation of the advocate-general to the European Court of Justice for a European-wide ban on the patenting of stem cell research based on human embryos? Does he agree that were such a ban to be confirmed by the ECJ it would have profoundly damaging effects on our science base and our pharmaceutical industries? Is he able to say what contingency plans the Government are putting in place to minimise the effect of any such ban?

David Cameron: The proposal in Scotland sounds quite like our proposal in the Budget for First Buy, which will help tens of thousands of young people to get on the property ladder by helping them with the deposit that many families find it extremely difficult to raise. There is a real worry in our country that the age of the first-time buyer is getting older and older, and that many families are finding that unless they have family help behind them they simply cannot get on the housing ladder. We must ensure that that is not the case and First Buy is a very good proposal that we are introducing in England. I will be interested to see what happens in Scotland.

Derek Twigg: On a point of order, Mr Speaker. I ask for your advice, please. The hon. Member for City of Chester (Stephen Mosley) has inadvertently misled the House today by suggesting that the bin collection service in Halton has been cut. As someone who is not the Member of Parliament for Parliament but who actually lives there, I must say that this was the first I knew about it. The service has not been cut. There is a pilot scheme, which has come about as a result of consultation in two wards, to look at alternative bin collections as a result of the demand for more recycling and more recycling receptacles. There has been no decision to cut the weekly bin collection service, so the hon. Gentleman is wrong.

David Hanson: You have caught me slightly off guard, Mr Hoyle. I was expecting my hon. Friend the Member for Hayes and Harlington (John McDonnell) to participate in the previous debate, but I shall plough on as ever. It is good to see you back in the Chair. I hope that you had a refreshing evening’s sleep after we had considered earlier matters.
	Clause 4, which we have just agreed without a Division, and clause 10 are inextricably linked. I hope that there will be another opportunity to discuss and probe with the Minister the impact of the proposals in clause 10, as they relate to the proposals in clause 4 that we have just approved. The effect of clause 10 is to reduce the rates of writing-down allowances for new and unrelieved expenditure from the relevant dates, which are 1 April 2012 for corporation tax and 6 April 2012 for income tax. As the Minister will know, the main rate will be reduced from 20% to 18% and, for special rate expenditure, from 10% to 8%. Special rate expenditure includes expenditure on long-life assets, thermal insulation and integral features, as well as expenditure incurred on or after 1 April 2009, with cars with CO2 emissions of more than 160 grams per km due for consideration under the clause. For chargeable periods that straddle the relevant date, the rate of the writing-down allowance is a hybrid of the rates before and after the change. The purpose of the amendment is not necessarily to oppose clause 10, but simply to ask the Government for a review on the impact of the abolition of capital allowances for smaller businesses and businesses that are more likely to invest, such as manufacturers generally.

John McDonnell: There is anxiety about the lack of assessment; it was undertaken so perfunctorily by the OBR because it was a last-minute decision by the Chancellor. Will my right hon. Friend comment on the grounds for that decision's being taken in such a last-minute manner? Was it a political stunt? Was there a rationale for it? How does he understand not just the decision itself, but the fact that it happened literally in the final 24 hours—at the last minute—before the Budget?

David Hanson: My hon. Friend makes a valid point, as it is exactly those companies that require capital investment support. The move will penalise companies that invest in manufacturing—for example, the car industry, advanced manufacturing, wind turbine manufacturing, and research and development across the board. These big manufacturing concerns are going to create the jobs of the future as well as protect current manufacturing jobs at a time when consumer demand might well be fragile because of high levels of unemployment, high levels of public spending cuts and general concerns about the squeeze on the economy and on people’s living standards and incomes generally.
	PricewaterhouseCoopers has said:
	“Many clients will balance the modest reduction in the capital allowances rates with the staggered reduction of the rate of Corporation Tax… Whilst the declining rates of capital allowances,
	in isolation, do not produce any winners, some businesses will benefit when the CT rate change is also taken into consideration. Capital intensive businesses”—
	this is the key point—
	“are likely to feel the reductions more, since they will have larger capital allowances pools.”
	Deloitte has said:
	“For some businesses the reduction in writing-down allowances for plant and machinery will be offset by the reduction in the main rate of corporation tax from April 2012.”
	We accept that.
	“However”—
	and this is the key point—
	“capital intensive companies… may not benefit to the same extent.”
	In its response to the Treasury Committee in the tax experts’ report on the Bill, the Chartered Institute of Taxation reported:
	“The various changes to capital allowances do not score well under coherence”—
	its key test.
	“The changes to short life assets seem to be an attempt to solve problems created by the reduction in writing down allowance rates at a cost of increasing administrative burdens. It would be better to have a proper long-term commitment to capital allowance rates. Reducing capital allowances to 'pay' for corporation tax rate cuts penalise unincorporated businesses and make the business tax system look as if it is lacking coherence.”
	I am not arguing that we should not undertake those capital allowance cuts. There may or may not be such an argument to be made, but what worries me is the overall impact of those cuts when married to the corporation tax cut. I am simply asking the Government to make a continuous assessment. I am asking them to publish an assessment six months after the implementation of the capital allowance cuts in April next year and, during the run-up to their implementation, to monitor the economy as it is now, so that we can establish whether they are on the right track.
	In a report published yesterday, the Association of Chartered Certified Accountants said that
	“it should be borne in mind that for large businesses with significant investment in plant and equipment, any changes to the tax cost of those assets will impact on long-term investment plans.”
	I do not know whether that statement will prove to be right or wrong. I am simply saying to the Minister that he should reflect carefully, monitor the situation, and report back to the House. In October 2012, we will have experienced six months of the capital allowance regime and 18 months of the corporation tax cuts. We need to ensure that we are indeed on the right track, and that growth has not been hampered by the Government’s measures.
	I should like to know what consultation took place and with which business organisations. I suspect that the consultation was not as thorough as it might have been. Will the Minister tell me with whom he discussed the proposals, when he discussed them, what the responses have been, and what he considers to have been the response across the board from capital-intensive businesses since the announcement in the Budget? When we deal with clauses 11 and 12, I shall want to know whether there was any adverse reaction to them.
	I suggest to the Minister that there should be an assessment of the long-term position. I hope he will accept that the amendment is designed not to torpedo his proposals, but simply to express our concern about certain aspects of the configuration between the corporation tax cut proposed in clause 4 and the capital allowance cut under clause 10 and the clauses that we will consider later. I ask him to place a flag in the sand signifying that after a period the Government will review the impact of those cuts to establish whether the fears expressed by people including my hon. Friends and me are materialising. We hope that they will not materialise, but if they do, we shall need to consider how to change track in due course.

John McDonnell: I have a fair amount of sympathy with the hon. Member for Amber Valley (Nigel Mills), because if he ever wants to return to his former profession he may well find that he has lost a number of clients as a result of that speech.
	The linkage between clauses 4 and 10 is inevitable, as my right hon. Friend the Member for Delyn (Mr Hanson) said from the Front Bench, because the corporation tax reductions are being paid for by these cuts in capital allowances. I do not want to upset the consensus that has emerged on the cuts in corporation tax, but I do not support them and believe that they will be an error in the long run. I address the issue of capital allowances in that context.
	I am unclear as to what the Government’s strategy is on stimulating the economy to tackle the recession in a way that rebalances the economy. I thought that this was not just going to be a rebalancing between the public and private sectors. I listened to some of the statements made by the Chancellor and the Secretary of State for Business, Innovation and Skills about rebalancing the economy as between the finance sector and the manufacturing sector, which gained support across the House. We heard about the development of a manufacturing strategy that would enable us to have a balanced economy between the finance, manufacturing and service sectors, so that if there was a crisis in one sector, the whole economy would not collapse as a
	result of overdependence on that sector. However, these Budget measures seem to fly in the face of that balanced approach.
	A number of methods can be used to re-stimulate the economy, one of which is tax cuts, including corporation tax cuts, as have been introduced in this Bill. Another method is the more directional approach of considering a form of tax cuts through the capital allowances, whereby the Government try to influence economic behaviour in a way they believe to be beneficial. The other method is to invest in largely capital expenditure through public services—I am talking about public investment.
	Let us deal with the formation of policies through this Bill. I am anxious about the fact that clause 4 cuts corporation tax almost as an act of faith, in the belief that that will translate into investment, the stimulation of the economy and, thus, more jobs. Very slight evidence has been produced to suggest that that will happen. My right hon. Friend the Member for Delyn has mentioned the range of debate that has taken place in the Treasury Committee and elsewhere, and the evidence that has been produced by some witnesses, but it is fairly slight. The addition of a further 1p cut in corporation tax at the last minute—again, the Office for Budget Responsibility did not even have time to assess it properly—demonstrates that the calculations have been done almost on the back of a fag packet. This smacks of something that other Chancellors have been prone to in the past: a last-minute political stunt just to surprise us on Budget day. Paying for that cut by cutting capital allowances flies in the face of the argument that the Chancellor and the Prime Minister have put forward in the past about ensuring that we stimulate the manufacturing base so as to rebalance our economy.
	I also find it worrying that the capital allowances are paying not only for the cuts in corporation tax more generally, but for the cuts in the treatment of the taxation requirements on multinationals. The briefing that we received from the House of Commons Library contains a quote from Mr Peston of the BBC about the treatment the Government are proposing for controlled foreign companies. The rules mean that there will be a 5.75% levy on cash held by multinationals in non-trading entities overseas and a low rate of tax, whereas various commentators thought it would be 8%. These are the same multinationals who
	“stash cash in tax havens and low-tax countries.”
	What seems to be happening is that UK companies that are struggling to obtain loans from banks, in the first instance, to invest in capital equipment to stimulate the local economy, and therefore jobs, and thus have an impact on the economy nationally are having their capital allowances cut so that we can reduce the rate that was intended to be introduced for tax multinational companies, which are avoiding, or evading, tax through the use of tax havens. That contradicts the statements that the Chancellor has made for some time.

Jim Fitzpatrick: One of the biggest elements of British manufacturing is the food industry. When I was a Minister of State in the Department for Environment, Food and Rural Affairs, the National Farmers Union lobbied me aggressively. Consequently, I lobbied the Treasury, as DEFRA does, about capital allowances in respect of buildings and equipment for the farming community. Has my hon. Friend had a chance to talk to the NFU about the comments he is making? Has he any understanding about whether or not it is being penalised in order to assist transnational corporations from outside the UK? Is this being done instead of supporting British manufacturing and British business people?

John McDonnell: Let me put it this way, as mildly as I possibly can: we hardly have a description of evidence-based policy making before us. Let us go back to the example of the additional 1p cut given by my right hon. Friend. When the Treasury Committee considered the matter, it invited evidence and Paul Johnson, the director of the Institute for Fiscal Studies, was questioned about the impact they would have. He said that we did not know about that with any precision. We do not know with any precision what the impact of the overall cut in corporation tax will be and we certainly do not know with any precision, globally or sectorally, what the impact of the
	capital allowances cuts will be. We are stepping into the dark and going down the wrong path and that is why we should have the review.
	I fear that a number of companies might have planned their development in advance based on the capital allowances that they thought were secure and would be forthcoming because of the statements of the previous Government as well of the Chancellor of the Exchequer over the past 12 months. They will now not proceed with that investment and as a result, the companies might not be put at risk but they will certainly not expand in the way that they planned and that will have consequences for jobs. In certain areas—my right hon. Friend has mentioned at great length the higher unemployment rates in certain regions—the effects on individual communities will be fairly catastrophic if this job growth does not go ahead.
	I oppose the reduction in corporation tax, as I think it is misguided. I would prefer it if, instead of cutting taxes to companies and forgoing that income, we could use the income from the top companies and corporations to invest in public infrastructure projects that will get people back to work and stimulate the economy overall. The last thing I would suggest the Government should do, even if they are cutting corporation tax, is pay for that cut with cuts in capital allowances. In my view, that flies in the face of everything that the Government have said about rebalancing the economy, stimulating the manufacturing base and shaping behaviour so that there is a longer-term view of investment in the capital and manufacturing infrastructure of this country based on security and the knowledge of the income that a company will have to invest in the future.
	Even if the Government cannot withdraw these provisions on the cuts in capital allowances and reconsider those on the corporation tax, I urge them at least to allow us to reconsider the matter within 18 months, as the amendment says, to see the implications overall. I honestly do not understand the fear within Government of having an open examination of this matter within that time scale. If I were a Minister, I would welcome it. If I were an advocate for this policy, I would welcome the opportunity to come back in 18 months or so and, if necessary, to gloat at its success. I certainly would not want to feel that I was on the run and hiding from the consequences of the decisions that I had proposed in a Finance Bill of this nature.

Andrew Love: I echo the final comments of my hon. Friend the Member for Hayes and Harlington (John McDonnell) about the amendment. It mentions capital allowances—that is what we are discussing—and the impact they will have on the UK economy is of particular concern at the moment.
	We must comment on the backdrop to this debate, as the economy has stalled over the past six months. We had a very bad final quarter of 2010 and although things improved in the first quarter of this year, the reality is that everyone was expecting much larger growth in the first quarter to compensate to some extent for the lack of growth in the final quarter of last year. If one reads what the commentators and forecasters have said, one sees that there is genuine concern, which is reflected in the figures provided by the Office for Budget Responsibility. The predicted growth rate has gone from 2.6% to 1.7%, but that figure might already be out of date, so there could be further reductions in the rate.
	It is suggested that unemployment will go up from 8% to 8.2% but, just as other Opposition Members have reflected on unemployment in their areas, I note that unemployment in my constituency is 9.3%, which is just under the London average. With the best will in the world, it is quite hard to see how we are going to turn the corner against the backdrop of what is happening internationally. One point that I think will hit home harder about the Government’s strategy is that the reductions in growth rates and the increases in unemployment mean that there will have to be an additional £43 billion-worth of borrowing over this Parliament at a time when the Government are telling us that the overwhelming strategy is to reduce the deficit.
	The Government’s recent paper on the growth strategy also forms part of the backdrop. It would not be hyperbole to say that there has been widespread dismay about the report because it does not contain the germs of ideas that people can reasonably hope will have an impact on the growth of the economy. As far as enterprise zones are concerned, we have been here before: they shift employment around their local region but they do not make a great contribution to growth or employment creation. On the national insurance holiday for small companies outside London and the south-east, we understand from a report produced in the Financial Times that it is unlikely to measure up to the claims that were made for it when it was introduced last year. Whether it is because of bureaucracy or other problems, it is not being taken up by small businesses and the reality is that it is not going to contribute to strengthening our growth rate.

Andrew Love: Absolutely. One has to question, as I am doing, the Government’s whole strategy, which they call a growth strategy but which does not appear to be delivering what we would expect from a proper growth strategy. Indeed, the previous Government’s growth strategy produced a far better result, as I shall discuss in a moment.
	I want to cover two other issues that have caused quite a lot of surprise and concern in relation to the Government’s policies. First, on construction, the first quarter growth figures for this year show one glaring and prominent inadequacy is in construction activity, which is going down rapidly. If we add to that the incoherent policies that the Government are pursuing on house building, planning consents and oiling the wheels of the construction industry’s infrastructure, one can only be very gloomy about the prospects for the next year or two.
	Secondly, I will mention manufacturing because it would be part of the report that we are suggesting the Government should produce. Manufacturing did rather
	better than I had suspected it would in the first quarter. Internationally, it seems to be delivering some of the changes in net exports that all the economic forecasters suggested, but we need a much more growth-oriented manufacturing sector if we are to bring about the changes that will be necessary if the changes in capital allowances are to go forward.
	Those considerations lead me to conclude that the Budget proposals before us—the reduction in the headline rate and the compensatory measures widening the tax base to pay for that—are the main thrust of the Government’s growth strategy in real terms. The Government suggest that those measures will help to rebalance the economy. I look at all issues as objectively as I can and I have to say that, given the measures being undertaken in the comprehensive spending review in relation to the public sector, we certainly need to do something to boost the private sector. We are told that the measures will do that, but will they? That is the question being addressed in the amendment.
	The Minister and the Chancellor have told us that a lower rate of corporation tax should act as a signal that we are open for business. There is some evidence that that approach has worked previously to a limited extent, but the question is whether it will work in the current economy. I am not a sceptic but, like the shadow Minister, I would like to see some Government projections about the number of businesses they expect to come from other countries either to expand existing operations or to start new ones here as a result of that signal.
	In his Budget statement, the Chancellor proclaimed from the Treasury Bench that we have
	“the lowest corporation tax in the G7”—[Official Report, 23 March 2011; Vol. 525, c. 955.]
	but we already had the lowest rate of corporation tax in the G7. If all we are trying to do is send a signal, surely we could have proclaimed that. There is also the wider Group of Twenty to consider. Looking at countries such as Ireland we must ask whether it is feasible and rational for our strategy to be to compete with Ireland. As we know, there is debate in Northern Ireland about whether corporation tax should come down to the level in the rest of the island. There is genuine debate about that, but I do not think it is being suggested that we want to compete with Ireland. We compete with the major G7 economies and our rate is already below theirs. The cut in corporation tax will re-emphasise that, but what we would like to know from the Minister is what benefit that will deliver to the British economy.

Andrew Love: Thank you for your guidance, Ms Primarolo. I will move swiftly on to capital allowances. The Government have discussed the need to widen the tax base and they have told us that reducing capital allowances is partly a method of paying for the cut in the headline rate. As I mentioned in an intervention, that phenomenon has been apparent in most western countries in recent years and, indeed, all the economists project that there will be much greater competition in business taxes. Corporation tax is likely to continue to come down, and the reduction will be partly made up by the widening of the tax base.
	Like my right hon. Friend the Member for Delyn (Mr Hanson), I am prepared to consider the changes to capital allowances, although I am concerned about the cut in the annual investment allowance from £100,000 to £25,000. I am perfectly happy, however, to look at that if we are reassured that the proposal in the amendment will make a significant difference. As has been said—and I have said so myself—the Office for Budget Responsibility added a rather sceptical note to the debate by suggesting, even though it had been informed at a late stage of the 1% cut in corporation tax, that that would not have a great impact on growth.
	Finally, I want to focus on the issue of who will benefit from the changes to capital allowances. As has been stated by a number of Opposition Members, high-profit, low-investment companies will be the main beneficiaries of the package, which is unfair and, if I may say so, will not achieve the rebalancing of the economy that the Chancellor has promoted for a considerable period, away from financial services towards the manufacturing and production of export-oriented goods. The change militates against all of that. In particular—and I refer to the cut from £100,000 to £25,000—it will penalise manufacturing, particularly businesses with high capital costs. My right hon. Friend the Member for Delyn mentioned the motor industry and others, but I am concerned, because I have a number of small, capital-intensive manufacturers in my constituency. Sadly, they are only a remnant of the manufacturing sector that we had 25 or 30 years ago, but we need them and we need to promote them. I am therefore worried about the Government’s proposals.

David Gauke: Amendment 6 would require the Chancellor to publish by 31 October 2012 an assessment of the impact of the proposed changes to capital allowances on the UK economy, as we have heard. The amendment was tabled to clause 10, which reduces the rates of writing-down allowance on the main rate pool of plant and machinery expenditure to 18% and on the special rate pool to 8%. Before I deal with the amendment, I will explain the purpose of clause 10, which is key to the amendment.
	Capital allowances allow businesses to write off their expenditure on capital assets, such as plant and machinery, against their taxable income. They act as a simple, statutory system in place of commercial depreciation. Capital allowances are given at different rates, depending on the year of investment and the type of asset acquired. The principal year-on-year allowance for plant or machinery expenditure is the writing-down allowance. The main rate is currently 20% per annum, and the special rate is10%.
	Both are calculated on the reducing-balance basis. We are making changes also to the annual investment allowance, in clause 11, reducing it to £25,000, as we have heard, and extending the short-life assets regime from four to eight years, in clause 12.
	The changes announced last year, given effect by clauses 10 and 11, enable a reduction in the main rate of corporation tax, which will reaffirm Britain’s competitive tax system and support enterprise and growth. The right hon. Member for Delyn (Mr Hanson) was right to highlight the fact that this is part of a package. In his earlier remarks, the hon. Member for Edmonton (Mr Love) pointed out that this was a partial contribution. There is none the less a gap, and further funding has been found—from the bank levy, for example—which has enabled us to reduce the corporation tax rate.
	We have already debated the benefits of reducing the corporation tax rate and we have returned to that topic to some extent in the present debate. I note that it does not have the support of all hon. Members, although it is supported by the Opposition Front-Bench team. It is helpful to repeat what was said by John Cridland, the director general of the CBI:
	“The extra 1p cut in corporation tax will help firms increase investment.”
	The objective is not just to reduce the amount of tax that companies pay, but to enable them to invest and grow businesses in the United Kingdom. I am pleased that that is welcomed throughout much of the Chamber.
	Our initial assessment of the package as a whole suggested that that would lead to an additional £13 billion of business investment by 2016 by making the cost of capital investment cheaper. The additional reductions in corporation tax rate and the extension of the short-life
	assets regime will help to increase further the levels of investment by business. We estimate that the overall effect of these measures will be to reduce the tax liabilities of the manufacturing sector by around £700 million by 2015. The changes to the rates of writing-down allowances do not mean that businesses will not continue to receive full tax relief for their investments in plant and machinery. Rather, the relief will be over a slightly extended time frame.
	Let me give an example. Where it would have taken 11 years under the current rate to write off more than 90% of the cost of a machine, it will now take 12 years. Meanwhile, the rates will continue to align broadly with average rates of depreciation across the economy. This does not mean that we intend to remove capital allowances in favour of pure accounting depreciation.
	On the issue raised by my hon. Friend the Member for Amber Valley (Nigel Mills), the previous Government did consult in some detail in their reform of corporation tax between 2002 and 2004. I am sure you remember it well, Ms Primarolo. The business response to that consultation was strongly in favour of retaining capital allowances. It was argued that capital allowances provide certainty and a level playing field, with the same rates of allowances applying to all. The flexibility of the system allows the pooling of expenditure and the ability to claim less than full allowances, depending on the individual’s business circumstances. My hon. Friend set out the case for a different approach to capital allowances. He brings great expertise on the matter and there is ongoing debate, but we do not intend to reopen discussion of that point.

David Gauke: Again, my hon. Friend raises an interesting point. We look forward to receiving any representations that he may wish to make on that. He is right to say that the rate of capital allowances has changed since 2004, and he highlighted in an intervention the fact that the previous Government—as I am sure you will recall well, Ms Primarolo—reduced writing-down allowances in 2007, a point that my hon. Friend made to the right hon. Member for Delyn.
	In response to those Opposition Members who raise their concern about the approach that the Government have been taking, I point out the approach taken by their Government in the previous Parliament, when they were all Members of this place. Whereas we are reducing the writing-down allowance from 20% to 18%, the previous Government reduced it from 25% to 20%. In our case that is a contribution towards reducing the main rate of corporation tax from 28% to 23%. The previous Government reduced it from 30% to 28%. Ours is a much more generous package for business and as a consequence a much better package for manufacturing than that contained in the 2007 Budget, where essentially the entire reduction in corporation tax from 30% to 28% was paid for by the reduction in the writing-down allowance from 25% to 20%.
	On amendment 6, the Government are fully committed to providing greater transparency on the impact of tax measures. I am sure Opposition Members have examined the tax information and impact notes that we published on 9 December relating to clauses 10 and 11, and the additional note that we published at Budget in relation to clause 12. It is clear that there is no need to publish a report into the impact of the capital allowances changes. We have provided a great deal of detail already, but for those hon. Members who have not had the opportunity to read the published notes, let me provide a brief summary.
	The note states:
	“The OBR assessment of the package was that the cuts in CT”—
	that is, corporation tax—
	“rates more than offset the reductions in investment allowances”,
	and that the businesses affected
	“will benefit from related reductions in the rates of CT.”
	As I said earlier, we expect the overall effects of the cuts in corporation tax rates and capital allowances changes to lead to an additional £13 billion of investment, and the additional changes to increase that further.
	Although this is not strictly in scope, as the amendment is to clause 10, I hope I may be allowed to make a few comments about the other changes to capital allowances in the Bill, to which we shall return in Committee upstairs. The reduction in the annual investment allowance to £25,000 is estimated to affect between 100,000 and 200,000 businesses. As the tax information and impact note clearly states, however:
	“The CT reform package will promote higher levels of business investment than would otherwise have been the case.”
	Further, more than 95% of businesses in the UK will be unaffected, as the qualifying capital expenditure will continue to be completely covered by the annual investment allowance, so companies, be they small, medium or large, will benefit from the CT cuts, including the cut in the small profits rate in clause 5, while most unincorporated businesses, which by their nature tend to be the smallest businesses in the economy, will still have their expenditure covered by the annual investment allowance.
	Clause 12 contains changes to the short-life assets regime, which will enable a business to obtain allowances that equate to the actual depreciation of the asset over the period of actual ownership. That change was described by Terry Scuoler, the chief executive of the Engineering Employers Federation, the country’s leading manufacturing organisation, as a change that
	“will make the tax system more efficient and remove in part barriers to investment.”
	The change will better recognise the cost to business of investing in modern machines with shorter lives.
	I can understand the right hon. Member for Delyn wanting to table an amendment calling for a report. It is a mechanism that Oppositions down the ages have used, it has been well used during our debates in Committee of the whole House and, indeed, I suspect that I may well have tabled such amendments in the past as an Opposition Front Bencher. They tend to be tabled and they tend to be rejected. Of course, the Government will
	always keep matters under review, but the proposed amendment does not add very much of great value. The changes that we are setting out to corporation tax are a vital component of the reforms that are essential if we are to achieve our goal of creating the most competitive tax system in the G20, and we have already set out clearly the impact of the changes to capital allowances.
	The right hon. Gentleman raised the question about employment and manufacturing, but the fact is that in the three months to February employment rose by 143,000, while in the first quarter of this year manufacturing grew by 1.1%, and in Q4 of 2010 the net rate of return of manufacturing companies rose to 10.4%, up from 8.6% in Q3.
	We are taking steps to support manufacturing and to make the UK more competitive with a stronger tax system. I therefore propose that the clause stand part of the Bill and ask the right hon. Gentleman to withdraw his amendment.

David Hanson: Once again, Mr Evans, I welcome you and look forward to your time in the Chair as we debate clause 35 of the Finance Bill. You will of course be aware that we tabled an amendment to the clause that you have chosen not to select, which is your prerogative; we are relaxed about that. However, it is important that we test and discuss the issues in the clause with Ministers to examine its impact, as well as the impact of other changes that form part of this package of measures.
	Our concerns centre on the effects of the various changes that have been made to child care support. Clause 35 introduces changes to the higher rate taxpayer relief for child care—an issue that caused some discussion in the last months of the previous Labour Government and will undoubtedly cause further discussion today. We need to look at the clause not only in its own context but in the light of wider taxation and benefit policies that the Government are progressing. This is part of a number of measures that will address a range of issues to do with child care and families generally. I also want to consider some of the technical matters that outside groups have raised with me and with other hon. Members regarding the wording of the clause and, if I may slightly stray outside the scope of the debate, the wording of schedule 8, which is related to it and to which we will return in Committee in due course.
	The background to clause 35 will be familiar to my right hon. Friend the Member for Edinburgh South West (Mr Darling) because it had its genesis in discussions that took place as part of the previous Labour Government’s proposals. Members will be aware that
	in 2009 my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), as Prime Minister, announced to the Labour party conference proposals that he brought before the House later that year regarding child care relief and basic rate relief.
	In government, Labour’s plan was to use the savings from limiting child care relief to basic rate relief to fund an expansion of child care places for two-year-olds in England, with potential consequential reliefs and amendments for Wales, Scotland and Northern Ireland. There was some controversy and discussion on those matters. The Exchequer Secretary will be aware that there was extensive discussion in the Labour Government about those matters, and that under the leadership of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath, they settled on limiting child care relief to basic rate relief, with the purpose of funding an expansion of child care places for two-year-olds.
	I would like clarification from the Exchequer Secretary today on—[ Interruption. ] Don’t worry, I am still here. The hon. Member for Crewe and Nantwich (Mr Timpson) will know that one picks up the occasional sedentary remark. Unless I reflect back on the last remark, it will not appear in Hansard, and on this occasion, I will not reflect back on it. As can be seen, Government Members have expressed an interest in my speech.
	The Government have made changes to the Labour Government’s proposals on basic rate relief and the expansion of child care places for two-year-olds. Indeed, the Government’s proposals are markedly different on the child care element, to which the relief is linked. The Labour Government had planned some 250,000 child care places for two-year-olds from low-income families, although I accept that that was scaled down to about 65,000 child care places. The Government proposals before the Committee will increase from 10 to 15 the hours for the pilot of child care places for 28,000 children. There is a significant expenditure saving in clause 35, compared with the Labour Government proposals. I think that it is worth focusing on those issues today, because if the scope of the discussion that I have given is accepted, this measure cannot be divorced from the reasons why the Labour Government intended to undertake the purpose of clause 35 and what the current Government are now doing with that resource.
	From January this year, value added tax will cost families with children an extra £450 a year on average. That is one of a range of measures on the table that will press hard on the ability of individuals to provide child care at affordable levels.
	The Government are pressing ahead with the change that my right hon. Friend the Member for Kirkcaldy and Cowdenbeath proposed in government to pay for the trebling of the number of free child care places available to the most deprived two-year-olds. We accept that the relief, which is manifested in clause 35, was badly targeted. That is why we made those changes in government, and our proposal would have paid for more of the poorest in our society to have child care. I want the Exchequer Secretary to explain how the resultant savings from the proposals will be invested to support issues such as child care for people in our community.
	At the same time, the Government are hitting family finances in other ways, such as through child tax credits and through child benefit being frozen, and indeed being cut for many people in the years ahead. The families who will be affected by this measure will soon
	be affected by other measures, particularly that on child benefit. The taxation changes in clause 35 need to be seen in the light of the decision to withdraw child benefit from April 2013 from households containing at least one higher rate taxpayer.

David Hanson: Actually, Ministers answer the questions and the Opposition ask them. I have been clear with the Exchequer Secretary about the proposal that we outlined in government, and that will be our view. We are potentially four years from government.
	I am simply pressing the Exchequer Secretary on what the impact is of clause 35, and why there has been a significant change—unless he wishes to clarify that further—to the proposals announced by the previous Government on extending child care for two-year-olds. It is important that we know not just what the clause means, because it will restrict child care support for higher rate families. The purpose of our proposal in government was to expand child care arrangements for poorer and lower-income families. The Government are now squeezing the middle while—unless the Exchequer Secretary clarifies that the contrary is the case—not providing the same level of child care places that were originally proposed by the Labour Government.
	This measure is coupled with a range of other measures, which are not before the Committee in clause 35, but which I hope you will give me the scope to touch on, Mr Evans. There are real-terms cuts to child benefit, which is frozen at £75.40 this year for families; the baby element of child tax credits, which is worth £545 a year, has been scrapped; benefits have been set on a permanently lower path of inflation; the basic and 30-hour elements of working tax credit have been frozen; and the second income threshold for the family element of child tax credit has been cut. Those measures all add to the pressures on child care responsibilities and on families.

Grahame Morris: As my right hon. Friend the Member for Delyn (Mr Hanson) has already indicated, clause 35 introduces schedule 8, which contains the provisions for reducing child care relief for higher earners. My understanding is that the latter measure will be dealt with at a later stage upstairs in Committee.
	As has been indicated, Labour considered proposing a similar change, but at its heart, it was trebling the number of free child care places available for the most deprived two-year-olds. That is the problem with the Government’s measure. The Labour party considered better ways of targeting support for child care to support both child care and the family throughout its time in government, but it seems that the coalition is taking
	money away from families completely, without retargeting it at those who are most in need. There is a basic contradiction between Labour’s position and that of the coalition Government. Indeed, the Government’s policies across the board seem to be an attack on families, and other groups in our society. Under their policies, middle income and working class families are hit harder than those at the top of society, and their policies do not redirect money into better-targeted child care.

John Cryer: Does my hon. Friend agree—this is in line with the intervention from my hon. Friend the Member for Coventry North West (Mr Robinson)—that this badly-thought-out measure is an attack on the collective ethos of society, which is always dangerous?

Grahame Morris: I am grateful for that point. Others have made it, and I have tried to echo its sentiments. The Government have the opportunity to rethink the implications of this decision, because implementation is not until 2013, so I hope that the Minister will address that point at the close of the debate. I am sure that hon. Members will recall that when the measure was proposed, Labour was engaged in a leadership election. Perhaps it was an attempt to steal the headlines.
	However, from representations that I have received from expert groups, individuals and constituents—I am sure that other Members have received similar representations—it seems that the policy has been shown to be ill-thought out. Whatever one’s views about middle England—whether it exists, whether it should be protected —it is crystal clear that the policy will disproportionately affect families with a single high earner. As someone who considers himself a socialist and something of a champion of the working classes and those at the lower end of the income spectrum, I think that there is a basic issue in this debate about justice and fairness. For families with a single high earner and perhaps no second earner, there is a clear injustice and anomaly when compared with a family with two high earners, as both families would lose the same amount.

Andrew Gwynne: I am happy to say that all three of my children went to St Anne’s primary school in Denton, where my wife, who is up for election tomorrow, is a chair of the governors. My eldest son goes to Audenshaw high school, which is also in my constituency, and all my children are getting a first-class education in those schools.
	Let me return to clause 35, Mr Evans, for fear of being told off by your good self for straying too wide of the issue. The issue, for Labour Members, is this. We support the extra investment in child care for two-year-olds, especially in constituencies such as mine. Denton and Reddish is quite a deprived constituency, which covers five wards in the Tameside metropolitan borough—which is, I believe, the 52nd most deprived local authority in England—and the two Reddish wards in Stockport, which, although Stockport itself is a much more prosperous borough, are the two most deprived wards in the constituency. Investment in early-years education has made a big difference to young people in constituencies such as Denton and Reddish. I would particularly welcome extra investment in nursery education in those deprived communities and, indeed, the Labour party proposed to provide it. I am pleased that the present Government are pressing ahead with a change that we proposed when we were in government.
	Where we differ is in our approach to targeting. My hon. Friend the Member for Easington made a valid point about that. Although I understand the arguments for targeting as a way of ensuring that communities such as my hon. Friend’s and mine receive the benefit of extra early-years provision, some constituents who are better off than the average in my constituency tell me—and it is difficult to argue against what they say—that they pay considerably higher taxes and pay into a welfare state system, and that they expect to get at least something in return. Those payments are their buy-in to the universal welfare system. I take on board your strictures, Mr Evans, but I also take on board the points made by my hon. Friend.

Andrew Gwynne: I entirely understand what my hon. Friend has said. There is a real inconsistency in the Government’s approach. While I think it commendable to raise additional money to target early-years provision, particularly in constituencies such as mine, I also think that the Government’s so-called family-friendly approach
	is deeply questionable. As I said earlier in an intervention, when the Prime Minister was Leader of the Opposition he made 5t clear that he would be proud to lead the most family-friendly Government in history. Whether the Government are family-friendly is, of course, a matter for debate and conjecture. I can only say that the constituents who regularly come to my advice bureau seem to have been clobbered time and again by the changes that the Government are implementing, many of which—

Andrew Gwynne: Absolutely. The funding of these measures needs to fit within the wider context, as set out perfectly eloquently by my right hon. Friend the Member for Delyn (Mr Hanson). He was given a certain degree of leeway by the Chairman to put all this in the context of the wider changes that this Government have introduced on family policy.
	Clause 35 goes some way towards dealing with the issues raised about tackling child poverty. The clause intends to ensure that extra resource is released for early years provision, and we support that. As I said, we proposed to do that when we were in government and, as my right hon. Friend mentioned, it highlights the real progress that was made on tackling child poverty during the Labour years, as was highlighted in the OECD report. I do not know whether the clause will have any impact on the Government’s ambitions to tackle child poverty, because that remains to be seen, but some of these changes could well start to have an impact. The explanatory notes state:
	“Approximately 450,000 parents currently qualify for the relief.”
	I am sure that the Treasury stands by that figure, as it produced the explanatory notes. Those 450,000 people will be concerned about these changes and the Government will have to answer the question that they will be asking: what do they get out of the system? If they are to miss out on this relief as a result of the Government’s changes and the extra child care places are targeted, the Government will have to deal with the points that my hon. Friend the Member for Easington (Grahame M. Morris) was answering on the general principle of universality.
	Having said that, it is important that this Government maintain a commitment to early years education. There is a degree of consensus across the House on the benefits of ensuring that children can start their education as young as possible, whether or not that is education through play in the context of early years provision—I
	think that we probably all agree on that. I note that the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), who has responsibility for children, is in his place. During the last general election campaign he visited a Sure Start centre in Horton Green, in my constituency, with the Conservative candidate. He also had his photograph taken outside my house as part of that campaign, and I was pleased that the then Opposition had visited a Sure Start children’s centre in my constituency. That underlined the background motive of the clause, which is to ensure that more resource is put into the early years.
	However, as my right hon. Friend the Member for Delyn made clear, people have concerns that this Government are not family friendly, because what they are giving with one hand, they are taking with another. Many of the measures that they have introduced in this Budget, of which clause 35 is part, are deeply damaging to families.

Diane Abbott: I am grateful to have the opportunity to say why clause 35 should not stand part of the Bill. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, the fundamental problem with the clause, which in principle at least the outgoing Labour Government were going to promote, is that in its new guise it fails the fairness test. As we go into election season tomorrow and tomorrow night, the fairness of what the Government are doing will be foremost in our electorate’s mind.
	Clause 35 deals with higher rate taxpayer relief for child care. In Hackney, I represent one of the most deprived areas of the country but I do have some higher rate taxpayers. It being Hackney, my higher rate taxpayers
	are people of discernment and intelligence and they are Labour-voting higher rate taxpayers, but none the less my concern overall is for the most deprived in our community.
	When clause 35 is stripped of any pretence of helping low-income families with child care, it is astonishing to see that this Government should so nakedly seek to attack many of their supporters. It is unthinking, chaotic and disorganised and it is not even politically coherent. When we put it in the context, as my right hon. Friend the Member for Delyn (Mr Hanson) sought to do, of the other changes in taxes and benefits that will affect middle England—the cuts in the amount that parents can claim for child care, the freezes to child benefit, the changes to the baby element of child tax credit, the freezing of the basic 30-hour element of working tax credit, the changes to the second income threshold for the family element of child tax credits or the withdrawal rates for tax credits—we see a frontal financial assault on middle England, the very people who the Government will look to for support not just in the local elections in 24 hours’ time but as they move forward.
	Why are the Government seeking to attack middle England in such a way? Is it because we have a Cabinet of millionaires? Do they not understand what it is to struggle to make ends meet, even on a relatively middling salary in a relatively middling condition of life? Is it ignorance or uncaringness about how the majority of people live? Who knows: there can be no question but that as the totality of the changes to taxes and benefits as well as the job losses in the public sector come to the attention of middle England, it will be hard for those people to understand or believe that the Government have their interests at heart.
	Another significant consideration about clause 35 and the suite of changes to child care, family tax and welfare issues is the effect they will have on women. One reason why issues such as tax relief on child care and particularly child benefit remain so emotive in public discourse is that they go back to the original child benefit which some Members might remember was paid to the mother, who had her own child benefit book. For many mothers, that was the only money of their own that they had—that was certainly the case in my family. Even though those payments are now paid through the tax system and to the family as a whole, these are still emotive issues in ordinary families who remember the old child benefit system and remember that the money went to mothers. The reason why it went to mothers was that it was always understood that child benefit was an effective benefit because mothers spent it on their children.
	With a Cabinet of millionaires, the Government do not understand how middle England is struggling. They do not understand how people in middle England fear for the future even if, on paper, they have good salaries and good jobs. They do not understand the emotive content of issues such as child benefit and child tax credit to ordinary women in ordinary families. Ordinary women are looking at the totality of the changes that the Government are making and asking, “Do they really understand my life? Do they really understand what it is to pay bills at the end of the month or to juggle a job and child care and to support the rest of my family?” When one looks at clause 35, presented naked, without the commitment that we had to help lower-paid
	families with child care, the answer seems to be that, no, they do not understand. The Cabinet of millionaires does not know what it is to be in the middle and to feel as though you are just one wage packet away from a really difficult situation.
	In the past decade, middle England has been encouraged to over-leverage itself and facilitated in doing so, and people are now trying to down-leverage by paying off more of their credit cards and trying to bring down their burden of debt. The Government may say that the £1,000 that people will lose because of changes to this tax relief is only a small amount, but for someone who is juggling their salary to pay off debt, worrying about paying their children’s tuition fees as they go through university and also worrying about how to pay for the care of elderly family members, that money will make the difference between their sums adding up or not adding up at the end of the month.
	The Government’s lack of understanding of the reality of life for many ordinary British people, even those who are, on paper, so much better off today, such as some of my constituents in Hackney, shines through in the clause and in the thoughtless and heedless way in which the Government have brought the measures forward. They have not sought to balance them with measures that might help the poorest, although that might have helped middle England to understand why the changes are being made. Currently, given the way in which the measures are being introduced, all that middle England can understand is that the Government do not understand what a struggle it is for middle-income families, and even some families in which the sole wage earner is a higher rate taxpayer, to make ends meet. Of course, similar proposals were originally brought forward by Labour, but in a very different context. Clause 35 has been brought forward in the context of a series of other measures that will also have an impact.

Geoffrey Robinson: Did my hon. Friend attend Prime Minister’s questions, given that she said that “redistribute” was a word heard more often among Opposition Members, and redistribution is perhaps a policy more often pursued by the Opposition. The Prime Minister ruled out redistribution almost unilaterally as a means by which we could help—

Kate Green: I beg your pardon. This was not intended to be a general discourse on child poverty. There was a specific reference in the OECD report to the importance of child care, and it is specifically that element of the report that I feel is relevant to the clause, but I entirely
	accept that we are discussing the implications particularly of the provision to remove the tax break for higher earners. My point is what do we do with that money? That must be a financial consideration too.

Diane Abbott: My hon. Friend touches on the fact that this is a debate about clause 35 of the Finance Bill, but it is also about how we as a society get through the current financial crisis. Does she agree that one way we will get through the current financial crisis is by something that clause 35 undermines: social cohesion and the principle of universality? To have the clause without the counter-balancing arrangements of child care for two-year-olds and the lower paid is to undermine the process of social cohesion, the only way we will get through the current financial crisis.

Mark Pawsey: I am pleased to have been able to secure this debate to consider the rights of adoptive parents. In respect of the adoption of children, we hear a great deal about the children involved, about what is best for them, and about how to provide them with stable and happy upbringing. Given the need to protect such children, who are often very vulnerable, it is right and proper that they should remain the main focus of attention. We also hear a great deal about the rights of the birth parents, particularly when they wish to have access to those children, but we hear rather less about the parents who adopt such children. They are often people who have given up a substantial proportion of their lives to provide a stable home and family background to children who are in desperate need of love and support. We must not forget that group of people and the unique set of challenges that they face.
	I hope to raise a number of the issues that affect adoptive parents. These include: the confidentiality of information relating to adoption; the way in which a birth parent, often years after an adoption has taken place, is able to challenge terms of contact; and the lack of support available to adoptive parents in difficult circumstances. As with many issues raised in the House, I learned about this subject when I was visited by a constituent at one of my surgeries, a lady whose family is engaged in a complex legal case involving her adopted daughter.
	The Minister and I have already corresponded about this case, and I have similarly contacted the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly) in respect of matters relating to legal aid that I shall talk about in a moment. Following the family’s wishes, they will remain anonymous in the debate. I will do my best to explain the elements of this rather complicated case, which raises a number of issues.
	The first issue relates to the security of data in matters of adoption. In the case to which I am referring, the birth mother was just 13 years old when she gave birth to her child. Both mother and child—the mother came from London—were put into care in London with the original ambition of finding a foster placement for them both. However, professionals in the field at the time quite reasonably decided that, given the mother’s age, the best long-term interests for both lay in putting the child up for adoption. The birth mother, despite her very young age, was reluctant to go ahead with the adoption and wished to keep the child. This wish to retain and gain access to the child has led to many of the difficulties facing my constituent and her family.
	In 2001, my constituent and her family successfully adopted the child, who was just 23 months old at the time; she is now 12. They carried on with family life, and adopted a further child. During these years—pretty happy years from what I understand—the family were keen to do what was right for the child. The contact agreement, which was to facilitate indirect contact with the birth mother through letters a couple of times a year, was honoured; and it continued quite successfully through to 2008. The birth mother’s reluctance to part
	with the child led to concerns that she might attempt an abduction, so the indirect contact did not include the ability to send photographs to the birth mother.
	Given that distance between the birth mother and the parent, one can imagine the adoptive parents’ concern when, seven years after the adoption, when the child was nine, the birth mother arrived unannounced at the family’s home. The question is how the birth mother was able to locate the family. The mother is and was resident in London, and this was an out-of-area adoption, with the child resident some 80 miles away. Clearly, the birth mother should not have been able to find out the name and address of the adopting family without their consent. This was the first of things to go wrong for my constituent and her family.
	This matter also raises questions about the very objective of adoption legislation. As the Minister has confirmed in his recent response to me, adoption legislation is there to provide a framework for protecting confidential information, such as the names and addresses of the individuals involved. That requires local authorities to obtain the consent of the individuals if disclosure is requested. The individuals might be concerned that disclosure could lead to them being identified. In this case, the adopting family had specifically not given such consent. I hope that the Minister will be able to give some guidance in his comments about the security of information in such cases.
	Seeing the birth mother on her doorstep, my constituent attempted to make the best of what was then a difficult situation and sought to avoid a distressing scene in front of the child. She invited the birth mother into her home. She did so on the basis that the birth mother had seen her daughter and that it might affect her adversely if further contact was denied. The adopting family reluctantly felt that they had no choice but to permit ongoing and regular contact. That happened for a couple of years, although it proved extremely difficult when, over time, the birth mother became increasingly aggressive and confrontational about access.
	After a period, the mother’s behaviour became such that the family felt obliged to contact the police, leading to the birth mother receiving a police caution for harassment. With that in mind, the family quite reasonably requested that direct contact should be stopped, as it was starting to have serious consequences on the child who had become afraid of being abducted. The matter became so serious that at one stage the police provided both child and adoptive mother with alarms in case of an attack. One can only imagine the family’s horror when, a few months after contact was stopped, the family received a court summons through the post, advising them that the birth mother was attempting to force direct contact once again. Even more than that, the birth mother had secured legal aid in order to do so.
	That brings us to the issue of the ability of a birth parent to challenge an adoption order. Unfortunately, under the existing rules my constituent and her family—the adopting family—are not eligible for legal aid, but they are also not sufficiently wealthy to afford expensive legal representation. They have been given an estimate of a cost of some £6,000 to fight the case in court, and they have no access to such a sum. I believe that the case
	raises serious issues about the rights of adoptive parents compared with those of birth parents, and about access to legal representation in such circumstances.
	According to the Adoption and Children Act 2002, the effect of an adoption order is to give parental responsibility to the adopters. It refers to the extinguishing of parental responsibility from those who had it previously. Once an adoption order has been made, birth parents cease to have any legal rights over the child, and therefore cannot simply claim him or her back. As I explained earlier, a particular cause for anxiety is the fact that the direct contact came about not as a result of the wishes of the adoptive family, but because the birth mother had somehow managed to locate them.
	Where does that leave the adopting family? They are left feeling that the birth mother has more rights than they have. It surely cannot be right for a birth parent who has breached the agreements of a contact order to be allowed to take the adoptive parents to court in order to make contact. I think most people would feel that in such circumstances the rules seem to be loaded in favour of the birth parents, with a lack of regard for the feelings and treatment of the adoptive family.
	The availability of legal aid to the birth mother has become a matter of real concern to my constituent and her family. I am aware that the Government are currently undertaking a review of legal aid, and have presented proposals that will result in 500,000 fewer instances of legal help and 45,000 fewer instances of legal representation being funded by legal aid annually. I am also aware that family law is the single most expensive area of legal aid. In 2009-10, the most recent year for which figures are available, it cost the taxpayer £597 million. It is therefore understandable that the Government wish to make changes.
	The Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon, has confirmed to me that legal aid is granted on the strength of information provided by applicants and their solicitors. I realise that it is calculated on a means-tested basis and takes no account of previous behaviour, but while I also understand the importance of safeguarding access to legal advice, I feel that in a case such as this the existence of legal aid complicates matters unnecessarily. I therefore welcome the Government’s measures to restrict it, especially in cases such as this in which it pitches one person unfairly against another, and especially when options such as mediation may be more effective. It seems fundamentally unfair that in the case that I have raised, legal aid is available to the birth mother but not to the adoptive parents. I realise that this is not within the Minister’s portfolio, but perhaps he will clarify the effect that changes to legal aid provisions will have on cases involving adoption.
	Finally, I want to draw attention to the apparent lack of support measures for adoptive parents. My constituent and her family have been subjected to the behaviour of an aggressive birth mother, and must now deal with a complex legal case without the funds that would enable them to instruct a lawyer. They feel that throughout this time little or no support has been available to them. My constituent feels that she has been left with no choice but to trawl the internet to search actively for advice and guidance from adoption charities. That situation cannot be right, so will the Minister take the opportunity to advise us on what system of support and guidance exists for parents of adoptive children?
	In highlighting this case and the cause of adoptive parents, I wish to make it clear that I do not expect the Minister to comment on this particular case and I simply seek his views on the broader issue of policy. I join my constituent in making the point that the legal importance of adoption orders often seems worthless if birth parents are able to take adopting families to court simply because they decide that they want to have more or full access. I fully appreciate the difficulties facing birth parents, particularly those who may not have wished to give up their child for adoption in the first place, but they should not be allowed to force legal proceedings and wreak havoc on new families who will have worked so hard to provide stability and security for the children they are adopting. If moves are made to encourage more direct contact, more guidance ought to be available for adoptive parents and more support measures must be established for them. I recognise that the law involved in this case is complex and that it is further complicated by the Government’s review of legal aid. They must do all they can to educate both adoption agencies and adoptive families to understand what their position is. However, I accept that the most important factor throughout all these cases is the requirement to facilitate happy and successful adoptions for years to come.
	The case I have described has been most distressing to my constituent and her family. For 10 years they have brought up an adopted child as their own in a happy and stable environment, but it is now one where both they and the child are extremely uncertain about their future together. I recognise that much of this unfortunate situation cannot be changed and that the clock cannot be turned back, but I wish my constituent and her family every success in their legal battle, and the best and happiest future for them and their adopted daughter.

Tim Loughton: I congratulate my hon. Friend the Member for Rugby (Mark Pawsey) on securing this evening’s important debate. It seems that we have been debating for days in this Chamber and he was unlucky enough to draw the short straw of having his debate at the tail end, after a night when some of us have been left short of sleep.
	Leaving aside the specific case behind today’s debate and the correspondence between my hon. Friend, myself, the Department for Education and the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly), to which reference has been made, I know that, like many of us across the House, my hon. Friend the Member for Rugby is a big admirer of the many thousands of wonderful parents in this country who have chosen to adopt a child. His closing remarks absolutely affirmed the nobility of such an activity, and I very much wish to encourage, and have been seeking to encourage, it in my time as the Minister with responsibility for adoption and children in care.
	My hon. Friend raised several crucial issues and I wish to address as many of them as possible because, as he knows, adoption is an issue on which the Government have been working extraordinarily hard over the past year. As he said, I cannot refer to the specific case of his constituent because it is before the courts. It is clearly a
	difficult case and it has been going on for some time. As he says, the child has been placed with the adoptive parents for some 10 years and that child is regarded as their own. He was also right to mention the oft-referred-to rights of children that are at the heart of the Children Act 1989. The welfare of the child must be the paramount consideration when dealing with any matters to do with children in the care system. He also mentioned that we hear, quite rightly, about the rights of birth parents. Only in extreme circumstances should a child be taken away from their birth parents and the process should end in adoption only when it is not safe for that child to be returned to the birth parents or parent.
	Most importantly, perhaps, we have made it clear from day one that we have a lot of work to do to get an adoption system that is truly fit for purpose. I have been coming at it from the angle of wanting to ensure that we have more adoptions as well as speedier and smarter adoptions, but I am also conscious that we must ensure that we get the right adoptions. The right children should be adopted and everything should be done to restore children to their birth families wherever possible.
	My hon. Friend raised quite an interesting scenario that falls in between those two points, in which parents had come forward as adopters, were confirmed in that role and took on a child as their own, but their position was challenged at a later date after which legal action was brought to bear on them. Such a situation is quite unusual, but he has certainly made me aware of such cases and in formulating our approach to adoption, I want to take them on board. If we are to promote adoption as providing a suitable home for a number of children who were not lucky enough to be able to be brought up with their birth parents, it is crucial that we ensure that there are safeguards so that the right children are placed for adoption and the people who adopt them have their interests protected, too. After all, they have come forward with the noblest of intentions. We need an adoption system that is truly fit for purpose in all those respects.
	No one could fail to be concerned by the fall in the number of adoptions of looked-after children over the past few years, particularly the decline in the timeliness of placements. When it has been decided that a child’s future best lies in an adoptive placement we owe it to that child to get on with placing them as swiftly as we can so that they have as good a chance as possible to secure a second chance at the stable family upbringing that was denied to him or her in the first place.
	At this stage, I would particularly like to commend the campaign that has recently been promoted by The Times and, in particular, by the journalist Rosie Bennett, who has highlighted a lot of the shortcomings in the adoption system and has worked with us in the Department for Education to try to highlight the problems and to promote some of the solutions. We are working with a number of organisations and people who are interested in the field of adoption.
	As I have said before, both in the House and outside it, we want to see the decline in adoption stopped in its tracks and more children adopted quicker and more smartly when that is in their best interests. I also want local authorities to consider carefully the support that adopted families need—my hon. Friend mentioned that—so that everything possible is done to increase the number of successful adoptions. It is not just a question of getting more adoptions to happen; adoptions must be
	sustainable and they must not break down. It is all the more important that we get a good match and that the right support is provided at an early stage and for as long as it takes so that everything possible is done to increase the number of lasting and successful adoptions.
	Placing a child for adoption with prospective adopters is only the start. Adoptions need to succeed and that I why I set up a ministerial advisory group on adoption. At our next meeting we will consider adoption breakdowns and how better adoption support can help to prevent them. As part of a wider programme of adoption reform, we have recently published revised national minimum standards, revised statutory guidance and an adoption data pack to inform and stimulate debate both nationally and locally about the volume and timeliness of adoption.
	In addition, as many hon. Members will know, we have asked David Norgrove to review the family justice system. The review panel’s interim report, which came out just last month, provides a valuable initial assessment of the challenges that the family justice system faces. We encourage everyone who has experience of the system to contribute their views over the coming months so that the panel has as much information as possible on which to base its final recommendations, which are due out later in the year. I have also had very productive discussions with Sir Nicholas Wall, the president of the family division, and I will be holding further discussions with judges and members of the judiciary who are involved in adoption.
	To come back to the specific circumstances outlined by my hon. Friend, the Adoption and Children Act 2002 makes it quite clear that in reaching a decision about the adoption of a child, the paramount consideration of the court or adoption agency must be the child’s welfare. In reaching a decision, the court or agency must take into account a number of issues, including the likelihood of any relationship with birth family relatives continuing, as well as the benefits to the child, and it must have regard to the child’s ascertainable wishes and feelings. I know from some of my constituency cases that ongoing contact with birth parents is a difficult and sensitive issue; great sensitivity and, often, the judgment of Solomon, is required.
	As my hon. Friend knows, during the period between a placement order and an adoption order, the adoption agency must satisfy itself as to the child’s welfare and consider any additional requests for support by the adoptive parents. Once an adoption order has been made, adoptive parents are in exactly the same position as birth parents, but adoption support services are available. An adoption order is, of course, final and irrevocable, other than in exceptional circumstances. The courts have consistently emphasised the special, permanent nature of adoption orders because they affect people’s status and alter the most fundamental of human relationships. However, the High Court has the power to set aside an adoption order on appeal in cases of mistake or where there has been a failure of natural justice due to procedural irregularities or fraud, but that is extremely rare and is to be avoided if at all possible as it is greatly unsettling for the child.
	Children, adoptive parents and birth family members all have the right to an assessment of their needs for adoption support services on request and it is for the
	local authority to decide what services to provide. Sensitive, proactive post-adoption support can sometimes make all the difference to the success of an adoption. Having looked at the record of some independent adoption agencies in particular, I know that it is invariably those agencies that offer good pre-adoption placement support and good-quality post-adoption support for as long as it takes to make sure that the adoptive placement is sustainable and able to last that tend to have the lowest disruption rates and the best records of giving children a decent second chance. The cost of not providing such support, in terms of children returning to care, can be very great in financial terms and, more importantly, in the human and social effects for the children involved.
	There is a legal framework under the 2002 Act which protects the identity of the adopted child and the adoptive family. My hon. Friend rightly raised the important issue of security of information for adopters and I would be interested to hear how the case he has discussed evolves and to learn where security breaches might have happened, because it is essential that the anonymity of new arrangements is paramount. If there are flaws in the system that enable people to exploit it in a way that is not in the best interests of the child, we need to be able to do something about that. We need to be able to identify such problems and I would appreciate further discussions with him as the case he mentioned is unravelled.
	No information should be disclosed that would reveal the child’s identity or whereabouts or the identity or whereabouts of the adoptive parents. Although there are safeguards in place, in today’s electronic world a determined person with little information about an individual might be able to find them, but that is no excuse for our not having in place systems that are as watertight as possible.
	As regards contact after adoption, my hon. Friend will know that before a child is placed for adoption, the adoption agency must assess the needs of the child in relation to future contact arrangements with members of their birth family. It must ascertain the wishes of the child, birth parents and any other person whom the agency considers relevant about future contact. As I said, that is a sensitive and difficult area. Contact plans are reviewed at the various stages of the adoption process, and are considered by the court when making a placement order and an adoption order. It is not something that is static—it is constantly assessed and reassessed.
	It is important that adoptive parents are made aware that, as part of the support services available to them, they can receive help in relation to any contact arrangements and, like the birth family and of course the child in question, the adoptive family can ask the adoption agency that placed the child to review the contact arrangements if they are not working or if the child’s needs for contact have changed. That is not uncommon as the child grows up and begins to ask questions about his or her origins. I must emphasise that once an adoption order is made, a birth parent has no automatic right to contact, and can only make an application to the court for an order for contact with the court’s permission. The court may make a contact order requiring the person with whom the child lives or is to live to allow the child to visit or stay with the person named in the order, or for that person and the child otherwise to have contact with each other. It bears repeating that a court will do so only if, having weighed the evidence, it is clear
	that such contact would be in the child’s best interests. The paramountcy consideration always comes into play. The revised adoption guidance that I mentioned earlier covers those matters.
	It is worth noting that if adoptive parents are unhappy with the way in which they have been treated by the local authority they have the right to make a formal complaint under the local authority complaints procedure. If they are unhappy with the council’s response, they may request a panel hearing, which will have independent representation. If they remain dissatisfied, and think that a local authority has treated them unfairly as a result of bad or inefficient management—“maladministration”—they can refer their complaint to the local government ombudsman.
	My hon. Friend mentioned legal aid, and I am aware of his correspondence with the Under-Secretary of State for Justice, my hon. Friend the Member for Huntingdon (Mr Djanogly). I will not deal with the detail of that issue, but he is right to refer to the review. It is worth noting, however, that the legal aid review is intended to achieve a level playing field for various aspects of family justice, as that is clearly not the case at the moment. Legal aid changes might affect adoption in some cases, but I am happy to take another look at that if, in the light of my hon. Friend’s case, he thinks that there is not a level playing field, and I am happy to take part in discussions with my colleagues at the Ministry of Justice.
	The Ministry of Justice recently consulted on changes to the legal aid system, with the aim of focusing resources where they are most needed, and it is currently considering a response to the consultation, so its final judgments are a little way off. Decisions about legal aid funding in civil cases are a matter for the Legal Services Commission, which is responsible for administering the legal aid
	scheme. Generally, legal aid in civil cases is available to anyone who qualifies, provided that the applicant is using the courts of England and Wales and that the case is within the scope of the scheme. Civil legal aid is available for cases involving the welfare of children. Each application, which may include the child if they are a party to proceedings, is considered on an individual basis and is subject to statutory tests of the applicant’s means and the merits of the case.
	Let me finish by repeating our absolutely, intently serious commitment to improving adoption services in this country, in particular to those people who come forward to provide loving and supportive homes to children who desperately need the second chance that they were denied with their own parents. With the wider reforms that we are introducing, we want to get people talking and thinking about adoption again, and we want all that to translate into action, with better-quality, sustainable placements right across the country. If there are examples from this case and others that hon. Members wish to raise that show in some way that the ability of adoptive parents, who have often gone through a long, drawn-out and intrusive process, to continue to offer a stable, loving family placement to an adopted child is impaired, we will need to look at that, and I am happy to review the situation if that is the case. I am grateful to my hon. Friend for raising the issue, and I hope that his constituent’s case, which is behind today’s debate, reaches a satisfactory conclusion. Equally, if there are important lessons to be learned that we can apply to the whole area of adoption, I should very much like to learn them.
	Question put and agreed to.
	House adjourned.